LONDON (Alliance News) - Richland Resources Ltd Tuesday said its pretax loss had widened following the continuing illegal mining in Tanzania, which has affected quality and value of its products and forced the company to try and optimise a smaller working area.
Richland reported a pretax loss of USD1.5 million in the six months ended June 30, widened from USD551,000 in the comparable period in 2013. This is due to revenue decreasing to USD3.8 million in the first-half of 2014, from the USD7.5 million reported in the first-half of 2013.
Revenue achieved at its Tanzanite Experience, its museum and retail outlet in Dar es Salaam, was 24% lower compared to the first-half in 2013. Instability in countries neighbouring Tanzania and travel warnings put in place to Kenya by the US have resulted in a significant decline in tourists to the East Africa region, it said.
Richland's wholly owned subsidiary TanzaniteOne Mining Ltd has experienced suffered illegal mining at the Block C license, in its Tanzanite project, since 2012, and this has continued into 2014. The mining infrastructure and activities in Tanzania have been damaged as well as theft of high quality gemstones, said Richland in its statement.
In an effort to counteract the illegal underground mining into its licenced areas, Richland has filed several police cases, but progress on recovering illegally occupied areas has been slower than the company had anticipated, it added.
"Following the recovery of the Northern part of the licence area, the extent of the damage to the recovered shafts were more significant than expected and rehabilitation of the mining areas will take longer than expected. Other key producing areas of our licence have not yet been returned," said Richland.
The company is attempting to optimise its work area, with production totalling 2.3 million carats from the processing of 13,169 tonnes of material at an average recovery grade of 178 carats per tonne. This represents a 53% increase in the carats produced, an 21% decrease in the tonnes processed and a 91% increase in the recovery rate compared with the first half in 2013.
Despite the mining optimisation and increase in production and grade, the quality distribution remains impacted by the illegal mining activities, resulting in a decrease in the quality and value of the tanzanite mined by TML, it said.
"The period saw us affect some necessary changes to move Richland forward into long-term profitability. While tanzanite production has formed the base of operations for many years we have begun the process of diversifying Richland's portfolio with the acquisition of the Capricorn Sapphire project in Australia. Production of sapphire should begin by the first-quarter of 2015," said Chief Executive Bernard Olivier.
Richland's share price was up 8.7% to 3.125 pence per share Tuesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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